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House passes delay on overtime rule implementation

Legislation that would delay the implementation of new overtime rules by six months passed the House on Wednesday, but the bill faces a potential veto by the president if it progresses.

The Republican-backed Regulatory Relief for Small Businesses, Schools and Nonprofits Act, or HR 6094, introduced by Rep. Tim Walberg, R-Mich., would postpone until June 1, 2017, the implementation of new Department of Labor rules that would shift the threshold for determining overtime pay.

The House approved the bill with a 246 to 177 vote. The bill moved to the Senate on Thursday, where it faced an uncertain future. President Obama has reportedly threatened to veto the bill.

The changes to the overtime rules are scheduled to go into effect on Dec. 1. The new rules would raise the threshold of eligibility for overtime from $455 per week to $913 per week, or $47,476 annually. As a result, about 4.2 million more workers across the U.S. would become eligible for overtime pay.

Last week, 21 states joined forces to challenge the rules in a federal lawsuit filed in the Eastern District of Texas. The complaint contends that the Department of Labor doesn’t have the authority to automatically increase the threshold every three years, as the new rules require, and that the shift will result in layoffs and job elimination as businesses struggle with soaring labor costs.

A similar lawsuit was filed by a coalition of business trade groups, led by the U.S. Chamber of Commerce.

Walberg’s bill to postpone enactment of the rules has won support of the National Restaurant Association, the National Retail Federation and the National Council of Chain Restaurants.

“Delaying the implementation date, allowing for a more gradual phase-in period, eliminating automatic indexing and carefully studying the impact this rule will have is crucial for small businesses navigating yet another burdensome regulation,” the NRA said in a statement.

Tim Garrett, a Nashville, Tenn.-based attorney and member of the labor and employment practice group at the law firm Bass, Berry & Sims, said the real battle for the legislation will be whether it can garner the two-thirds vote needed to override a potential veto.

“I would be surprised,” Garrett said. “This is a difficult political point to make it appear as though a senator or congressman is against an increase in pay for the middle class.”

Still, Garrett said he hopes lawmakers hear the message that “this is too much, too quickly” for businesses.

The lawsuits challenging the rule, meanwhile, are not likely to delay the Dec. 1 implementation date, he said. But Garrett held out hope that the legal challenge could at least potentially result in a revision of the rules to eliminate the automatic threshold hikes.

“The most likely chance for success has to do with the automatic increase provision,” he said.